          
          
          It is very hard to understand a new subject unless you  know
          the  basic vocabulary used to talk about that subject.  Here
          we have provided a glossary  of  words and terms used in the
          mutual fund industry.
          
          
          
                             ====================
                                  
          
          
          12b-1  Fee  -  Named  after  the  Securities  and   Exchange
          Commission  ruling  that permits mutual funds to pay certain
          expenses, such as advertising and distribution costs, out of
          fund assets.  The  fund's  prospectus details 12b-1 charges,
          if applicable.
          
          401(k) - A qualified employee benefit plan in which employee
          contributions  are  made  on a pre-tax basis.  Both employer
          and   employee   contributions   compound   tax-free   until
          withdrawn.
          
          Adviser - The organization employed by a mutual fund to give
          professional   advice  on  the  fund's  investments  and  to
          administer its assets.
          
          Asked Price - The price at which a mutual fund's shares  can
          be  purchased.   It is the current net asset value per share
          plus sales charge, if any.  For no-load funds, bid and asked
          prices are the same.  (See Bid Price)
          
          Automatic Reinvestment - A big  advantage of mutual funds is
          the  ability  to  reinvest  dividends  and   capital   gains
          distributions.   These  reinvested dividends are used to buy
          more shares of the fund and increase your holdings.
          
          Balanced Funds -  Generally  have  a  three-part  investment
          objective:  1)  to  conserve the investors' principal, 2) to
          pay current income, and  3)  to  promote long-term growth of
          both principal and income.  Balanced funds have a  portfolio
          mix of bonds, preferred stocks, and common stocks.
          
          Bankers'Acceptances(BAs)  -  Short-term,non-interest-bearing
          notes sold at a discount and redeemed at maturity  for  full
          face  value.   Primarily used to finance foreign trade.  BAs
          represent a future claim on a U.S.  bank that provides lines
          of credit to U.S.  importers.  BAs are collateralized by the
          goods to be sold and  are  guaranteed by the importer's U.S.
          bank.
          
          Basis Point  -  Term  used  to  described  the  movement  of
          interest  rates,  expressed in hundredths of a percent.  One
          hundred basis points equals one percent.  An increase from 7
          percent to 8 percent would be a change of 100 basis points.
          
          Bear Market - A sustained  period  in which prices of stocks
          or bonds drop.  Usually indicates a period of poor  economic
          activity.  The opposite of a bull market.
          
          Bid Price - The price at which a fund's shares are  redeemed
          (bought back) by the fund, generally the net asset value per
          share.  Also known as the sell price or redemption price.
          
          Blue  Chip  -  The  common  stock  of  a well-known national
          company with  a  history  of  earnings  growth  and dividend
          increases, e.g., IBM, General Motors, AT&T, ect.
          
          Blue  Sky  Laws  -  Laws of the various states governing the
          sale of securities including mutual fund shares.
          
          Bond  -  A  security  that  represents  debt  of  an issuing
          corporation  (or  government).   Usually,  the   issuer   is
          required  to pay the bondholder a specified rate of interest
          for a specified time and then repay the principal amount, or
          face value, of the bond at maturity.
          
          Bond Fund - A mutual fund whose portfolio consists primarily
          of bonds.  The emphasis  is  generally on income rather than
          growth.
          
          Broker - A person  in  the  business of effecting securities
          transactions for others.  Generally paid by commission.
          
          Bull Market - A sustained period in which prices  of  stocks
          or  bonds  are  advancing  (going  up).  Usually indicates a
          period of economic growth.  The opposite of a bear market.
          
          Call Option - A contract that  gives the holder the right to
          purchase a specified security at  a  specified  price  by  a
          specified date.
          
          Capital Gains  -  Profits  realized  from  the  sale  of  an
          investment.
          
          Capital  Gains  Distribution  -  When a mutual fund sells an
          investment for a profit,  it  realizes a capital gain.  Most
          mutual funds distribute these capital gains once a year.
          
          Capital Growth - An increase in the market value of a mutual
          fund's securities, as reflected  in  the  net asset value of
          the fund shares.
          
          Cash Equivalent  -  A  term  used  for  assorted  short-term
          instruments  such  as  U.S.  government securities, CDs, and
          short-term municipal and corporate bonds and notes.
          
          Certificates of Deposit (CDs) - Usually issued by banks  and
          other  financial institutions, certificates of deposit pay a
          fixed rate of interest for  a specific period of time.  Also
          known as "time certificates of deposit".
          
          Closed-End Fund - Investment company  that  issues  a  fixed
          number  of  shares which are then bought and sold on a stock
          exchange or over  the  counter.   The  price of a closed-end
          share is determined by supply and demand - it may be more or
          less than the fund's net asset value.
            
          Commercial  Paper  -  Short-term,  unsecured promissory	note
          issued by corporations and financial institutions to finance
          short-term credit needs.
          
          Compound Interest - When you deposit money in the  bank,  it
          earns  interest.   When  that  interest  also begins to earn
          interest, the result is compound interest.  Compounding also
          occurs  if  income  or   dividends  from  mutual  funds  are
          reinvested.  Because of compounding, money is able  to  grow
          much  faster  if  an  investment's  earnings are left in the
          account.
          
          Consumer Price Index (CPI) -  Index that notes the change in
          prices for consumer goods and services.
          
          Custodian  -  The  organization  (usually  a  bank  or trust
          company) that  keeps  custody  of  the  securities and other
          assets of a mutual fund.
          
          Debenture - A bond secured only by the credit worthiness  of
          the corporation.
          
          Distributions - Dividends  paid  from  investment income and
          payments made from realized capital gains.
          
          Diversification - The spreading  of one's investment risk by
          putting assets in a wide-ranging  portfolio  of  securities.
          Most  mutual  funds  are highly diversified; most containing
          dozens, even hundreds or thousands of individual stocks.
          
          Dividend  -  When  companies  pay  part  of their profits to
          shareholders, those profits are called dividends.
          
          Dollar Cost Averaging - Investing a fixed amount of money in
          mutual  fund shares at regular intervals, such as monthly or
          quarterly,  rather  than  all  at  once.   This  reduces the
          average share costs  to  the  investor,  who  acquires  more
          shares  during  periods  of  lower  prices  and fewer shares
          during periods of higher prices.
          
          Dow Jones Industrial Average (DJIA)  - Stock market index of
          30 blue chip industrial stocks issued by Dow Jones & Co.  to
          indicate changes in the overall market.
          
          Equity  -  When you own part of something, your home or car,
          for example, you have equity in it.  Stock is also an equity
          investment because each share you own represents part of the
          company that issued it.
          
          Exchange Privilege -  Mutual  fund  families generally allow
          shareholders to transfer funds from one fund in  the  family
          to another.  There are usually restrictions on how often the
          privilege can be exercised.  (This is generally considered a
          sale and new purchase for tax purposes.)
          
          Expense Ratio - The amount, expressed  as  a  percentage  of
          total  investment,  that  shareholders  pay  for mutual fund
          operating expenses and  management  fees.  This money, which
          may be as high as 1% or  more  of  shareholders  assets,  is
          taken  out  of  the funds current income and is disclosed in
          the annual report to shareholders.
          
          FDIC (Federal Deposit Insurance Corporation) - The agency of
          the U.S.  government whose basic purpose is to  insure  bank
          deposits.   Currently, depositors are covered up to $100,000
          at an insured bank (this is subject to change).
          
          IRA (Individual Retirement Account)  -  Personal  retirement
          account  that  an individual with employment income can fund
          with tax-deductible contributions of  up to $2,000 per year.
          All earnings  within  the  account  accumulate  tax-deferred
          until  the  funds  are  withdrawn - generally at retirement.
          Early withdrawals - generally those made before age 59 1/2 -
          may be subject to  a  10%  penalty  tax  as well as ordinary
          income taxes.
          
          IRA Rollover - The transfer of IRA money from one investment
          and the placement (or roll-over) of that money into  another
          investment.   There  are  restrictions on this and heavy tax
          consequences may occur if not done properly.
          
          Investment Company -  A  corporation,  trust, or partnership
          which invests  the  pooled  funds  of  its  shareholders  in
          securities  appropriate  to the fund's investment objective.
          Mutual  funds  are  the  most  popular  type  of  investment
          company.
          
          Investment  Objective  -  The  goal, such as current income,
          long-term growth, growth  and  income,  ect., which a mutual
          fund pursues.  This is always listed in  the  prospectus  of
          the fund.
          
          Leverage  -  The  use  of  borrowed  money  for   investment
          purposes.  Can increase profits or losses and increase risk.
          
          Liquidity  -  The  ability  of  an  asset  or security to be
          converted quickly and easily  into  cash.  Bank deposits and
          mutual fund shares are  examples  of  a  liquid  investment.
          Real  estate  is not considered liquid because it may take a
          long time to sell.
          
          Load Fund - Load funds are simply funds with a sales charge.
          They   are  generally  offered  through  brokers,  financial
          planners, or insurance agents.  A load is a sales commission
          that goes  to  the  person  selling  the  fund shares.  (See
          No-Load Fund)
          
          Management Fee - The amount paid by mutual  funds  to  their
          investment  advisers.   The  average  annual  fee  is  about
          one-half of one percent of fund assets.
          
          Margin Account - A brokerage account that allows an investor
          to  buy  or  sell  securities  on  credit.   An investor can
          purchase additional  securities  against  the  value  of the
          securities in the account.
          
          Maturity - The length of  time  before  a  bond is due to be
          repaid in full.
          
          Money Market Instruments  -  Short-term  credit  instruments
          such  as  Treasury bills, bankers' acceptances, certificates
          of deposit, and bank repurchase agreements.
          
          Municipal  Bonds  -  Debt  obligations  of  state  and local
          entities.  Generally,  the  interest  earned  is  free  from
          federal  taxation  and  often  from state and local taxes as
          well.
          
          Mutual Fund -  A  professionally  managed investment company
          that combines the money of  many  people  and  invests  this
          money  in  a  wide  variety  of  different securities.  Most
          mutual funds are open-ended - meaning that they continuously
          sell new shares to investors as  well as redeem, or buy back
          shares.
          
          National  Association  of  Securities  Dealers  (NASD)  -  A
          self-regulatory organization  of  brokers  and dealers which
          administers rules and regulations to prevent fraudulent acts
          against the investing public.
          
          Net Asset Value Per Share (NAV) - This is the  market  value
          of  a  mutual fund's total net assets, divided by the number
          of shares outstanding.
          
          No-Load Fund - A mutual fund that does not  charge  a  sales
          commission,  or  load,  when  you  buy  shares.   Generally,
          no-load  mutual  fund shares are purchased directly from the
          fund.  (See Load-Fund)
          
          Open-End Mutual Fund -  The  more technical description of a
          mutual fund.  The term open-end refers to the fact that this
          type of mutual fund is continuously offering new  shares  to
          investors as well as redeeming, or buying, them back.
          
          P/E  (Price/Earnings)  Ratio  -  The  relationship between a
          stock's price and the amount of earnings per share.
          
          Prospectus - The official booklet that  describes  a  mutual
          fund.   The  prospectus  contains information as required by
          the Securities and Exchange  Commission  on such subjects as
          the fund's investment  objectives  and  policies,  services,
          fees,  restrictions,  officers and directors, how shares are
          bought and redeemed, and the fund's financial statements.
          
          Proxy - The written transfer of voting rights to someone who
          will then vote according to the wishes of  the  shareholder.
          Usually  done  if  the  shareholder  cannot  be present at a
          stockholders' meeting.
          
          Put Option - A contract that gives the holder the  right  to
          sell  a  specified number of shares by a specified date at a
          specified price.
          
          Redemption Price - The price at which a  fund's  shares  are
          redeemed  (bought back) by the fund, generally the net asset
          value per share.  Also known as the sell price or bid price.
          
          Reinvestment Privilege - A  service  provided by most mutual
          funds  for  the  automatic   reinvestment   of   shareholder
          dividends  and  capital  gain  distributions into additional
          shares.
          
          Sales Charge - A commission paid  to a broker or other sales
          professional when purchasing shares of a mutual  fund.   The
          charge  is  added  to  the  net  asset  value per share when
          determining the asked price.
          
          Securities  &  Exchange  Commission (SEC) - An agency of the
          federal government with  the  power  to enforce federal laws
          pertaining to the sale of securities.  Regulates and governs
          stock  exchanges,  stockbrokers,  investment  advisers   and
          mutual funds.
          
          SIPC  (Securities  Investor  Protection  Corporation)  -  An
          agency established by Congress  to provide customers of most
          brokerage firms with protection similar to that provided  by
          the  FDIC  for  bank depositors, in the event that a firm is
          unable to meet its financial obligations.
          
          Speculative - A high degree of risk.
          
          Stock, Common - A  security  that  represents ownership in a
          corporation.
          
          Stock, Preferred - A security that pays a fixed dividend and
          has  first  claim  on  profits  over  common  stocks for the
          payment of that dividend.
          
          Total Return - A calculation that includes the fund's change
          in net asset value plus  the  value  of  capital  gains  and
          dividends distributed and presumed reinvested.
          
          Transfer  Agent  -  An organization, usually a bank, that is
          employed  by  a   mutual   fund   to  prepare  and  maintain
          shareholder account records.
          
          Treasury Bill (T-Bill) - Short-term debt (maturities of  one
          year  or  less) issued by the U.S.  government at a discount
          from face value.
          
          Treasury  Bond  -  Debt  obligation  issued  by   the   U.S.
          government with a maturity ranging from 10 to 30 years.
          
          Treasury   Note   -  Debt  obligation  issued  by  the  U.S.
          government with a maturity ranging from 1 to 10 years.
          
          Turnover  Rate  -  Indicates  how  active  the  fund  traded
          securities in the  past  one  year  period.   The higher the
          turnover, the greater the  fund's  brokerage  costs.   These
          costs  can lower your return because they reduce the profits
          (or increase the losses) on securities trades.
          
          Wire  Transfer  -  Use  of a bank to send money to a fund or
          receive money from a fund.
          
          Withdrawal Plan - A service many mutual funds offer to their
          shareholders  who  wish  to   receive  payments  at  regular
          intervals - usually monthly or quarterly.  The payments  are
          drawn   from   the   fund's   dividends   and  capital  gain
          distributions, if any, and from principal, as needed.
          
          Yield - The dividend or  interest  income that a mutual fund
          pays out in one year,  expressed  as  a  percentage  of  the
          fund's net asset value.
          
          Zero-Coupon  Bond  - A bond that is sold at a discount (less
          than its  face  value)  and  pays  no  interest  until it is
          redeemed at face value on a specific date.
          
          
          
                             *** End of Chapter ***
                             
          
          
